MoD criticised on budget forecast

The first Astute nuclear submarine came off the production line in June

The Ministry of Defence has been accused of "massaging" the estimated costs of 20 of its biggest projects.

It forecast a £781m saving on the Major Projects bill - but £448m of that had been moved to other military budgets, an MPs' report said.

Projects are still forecast to run 11% (£2.6bn) over budget and overall delays across projects added up to 36 years.

The MoD said the £448m was not claimed to be an overall saving, but part of a better approach to "cost management".

The UK spends about £6.5bn a year on 50 major defence equipment projects.

There is no overall saving to the department as a whole as other budgets will now be hit with charges that they had not planned to cover Public Accounts Committee report

The Public Accounts Committee has been investigating cost-saving measures by the Ministry of Defence - which has faced criticism in the past for going billions of pounds over-budget, while projects ran over deadline.

The MoD introduced a review of 20 of its biggest procurement projects, for equipment like submarines and armoured vehicles, and identified ways to reduce the forecast costs of the projects by £781m overall.

But the PAC said, of that figure, £91m was a rebate and exemption from customs, and £448m was transferred to other budgets - something the MoD said was done to make individual teams "more accountable for delivery".

'No risk'

The report said: "There is no overall saving to the department as a whole as other budgets will now be hit with charges that they had not planned to cover."

The committee's Conservative chairman Mr Leigh added: "We have no idea what cuts will have to be made to other activities of our armed forces as a result of this massaging of the figures."

Other savings were made by looking again at quantities required - for example buying fewer guided multiple launch rockets - which had proved to be more accurate than originally thought.

The MoD is nearly £3bn over budget yet still it won't hold anyone accountable for this shambles Nick Harvey Lib Dem defence spokesman

It notes the MoD said reducing rockets and the number of support vehicles would create "no risk to operational capability".

The report says 14 projects had reported no new delays. And of 36 new projects costing more than £20m approved since 2003 - 34 are forecast to be finished on or under budget.

'Toxic legacy'

But on the so-called "toxic legacy" projects - such as Astute class submarines, the Nimrod MRA4 aircraft - some dating back to the 1990s before procurement was reformed - the department was "still struggling".

Astute class submarines are now £1bn over budget. The first of four - HMS Astute - was launched in June, nearly four years behind schedule.

Defence Minister Lord Drayson said he would study the report carefully and respond to Parliament - but said it had taken a "constructive view" of the work done on armed forces procurement.

MoD - as the report makes clear - only claimed real savings on project costs Lord Drayson

He added: "To ensure project teams' performance will be assessed on costs over which they have direct control, non-programme costs have been allocated to other more appropriate areas. We have been clear that we do not claim these as savings to the department.

"This measure will help us take a more effective corporate approach to cost management. This was properly costed, and as the PAC report acknowledges this was a reasonable measure.

"MoD - as the report makes clear - only claimed real savings on project costs."

But shadow defence secretary Liam Fox accused the government of "spinning the figures to try to portray savings".

He added: "These are horrendous overruns that inevitably impact upon our ability to run the frontline at a time when our troops are in need of extra equipment. "

And Liberal Democrat defence spokesman Nick Harvey said overall delays in getting equipment to forces were now six times longer than they had been during the Second World War.

"The MoD is nearly £3bn over budget yet still it won't hold anyone accountable for this shambles," he said.